It's Still Oil, Stupid

Only a few months after the giddy buzz that the U.S. would shortly be energy independent and free of disastrous entanglements in the Middle East, the combined Syrian/Egyptian/Iraqi/Libyan crises brought home to those few in this city paying attention the grim reality -- it's still about oil.

No one has much mentioned it, but the $12 billion Saudi/Kuwait/Emirati financial bail-out of General Sisi's new regime in Egypt, the funding which enables Sisi to ignore U.S. and European appeals for moderation, didn't come from the Sovereign Wealth Funds of the Gulf States, much less their national budgets or the private wealth of their royal families. Those dollars came straight from the pocket-books of American and European truckers and drivers, now paying nearly $18 more a barrel for oil than they were at the end of June -- an increase which will cover the entire year's Egyptian bail-out in only 10 weeks of increased profits for the Gulf governments.

That's right -- in only 10 weeks the increase in the price of oil since June will pay for an entire year's worth of Saudi subsidies for the Egyptian government, subsidies so large that they swamp U.S. influence in the region. Our loss of power and influence is directly financed by our refusal to move beyond oil.

This same cascade of windfall taxes to the Saudis enabled them to take the lead in funding their favorite factions within the Syrian opposition, those with strong antipathies to the U.S., even while the Egyptians, whom they are bailing out, oppose U.S. intervention against Assad.

Yes, Syria produces very little oil -- and both Assad's massacres and the vicious brutality of some of the factions opposing him are extraordinary violations of human rights standards and norms. So you can make a non-oil based "duty to protect" case for action in Syria -- but when such massacres occur in places like the Central African Republic they do not get front-page coverage in the New York Times. Last Sunday on Fareed Zakaria's GPS program, Zbigniew Brzezinski was there to remind us what this is really all about. We need, he argued, a comprehensive policy not for Syria, but for the entire region, and it needs to be solidly based on the needs of oil importing nations including those in Asia like China and Japan. As Bryan Walsh pointed out in Time, the realization is sinking in that more U.S. oil production does not mean energy independence.

Meanwhile, this city dithers. Instead of seizing the opportunity posed by increased U.S. oil production to accelerate our shift away from an oil based transportation system, Bakken oil is being offered as a justification for ever more inaction, even as the price of oil creeps towards $120/barrel, four times what it was a decade ago, and high enough to create an unprecedented hole in the U.S. economy -- while further empowering Russia, Saudi Arabia and Iraq.

Voices are even arguing for these high oil prices because they help stabilize the Russian and Saudi governments. Trevor Houser of the Rhodium Group, a consultancy, says : "It's not clear to me that a sharp drop in oil revenue in Saudi Arabia, Kuwait or the United Arab Emirates would improve global stability, given current instability in the region, and it's not clear it would ultimately be in America's interest." The dominant perspective in the administration doesn't go that far -- but there are strong signals that even as the Saudis undercut our diplomatic objectives in the region, we are so nervous about their potential to roil oil markets that we will once again fail to seize the moment and use an oil disruption to mobilize the will to break our dependence. Elon Musk and Tesla -- or GM with its electric Spark -- may be demonstrating that we don't have to rely on oil alone -- and a record number of electric cars were sold last month -- but while innovators and consumers may be ready to move, Washington is frozen.

Forty years ago in October the first oil embargo taught the U.S. a lesson -- an economy dependent on a single fuel, oil, for its entire transportation system -- is fatally flawed. Yet this is a lesson we seem resolutely determined to forget.

A veteran leader in the environmental movement, Carl Pope spent the last 18 years of his career at the Sierra Club as CEO and chairman. He's now the principal advisor at Inside Straight Strategies, looking for the underlying economics that link sustainability and economic development. Mr. Pope is co-author -- along with Paul Rauber -- of Strategic Ignorance: Why the Bush Administration Is Recklessly Destroying a Century of Environmental Progress, which the New York Review of Books called "a splendidly fierce book."